Wunda Joinery Pty Limited (in Liquidation) v Wunda Projects Australia Pty Limited
[2007] SASC 301
•16 August 2007
SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
WUNDA JOINERY PTY LIMITED (IN LIQUIDATION) & ANOR v WUNDA PROJECTS AUSTRALIA PTY LIMITED & ORS
[2007] SASC 301
Reasons of Judge Lunn a Master of the Supreme Court
16 August 2007
PROCEDURE
Pleading under Supreme Court Civil Rules 2006 - generalised and vague pleadings struck out as embarrassing - pleading the effect of documents - plea of fraud under s 86 of the Law of Property Act - further particulars under 6R 102 - when to be postponed until after disclosure of documents - part of statement of claim struck out and some further particulars ordered.
WUNDA JOINERY PTY LIMITED (IN LIQUIDATION) & ANOR v WUNDA PROJECTS AUSTRALIA PTY LIMITED & ORS
[2007] SASC 301Reasons on applications to strike out the statement of claim.
JUDGE LUNN: On 28 February 2007 the plaintiffs issued this originating process under the Corporations Rules (South Australia) 2003. On 16 March 2007 I directed that the action proceed on pleadings. On 20 March 2007 the plaintiffs filed their statement of claim (“the SOC”).
The first plaintiff (“the plaintiff”) was wound up by an order of the Federal Court made on 5 August 2005. The second plaintiff is its liquidator. The third and fourth defendants were the shareholders and officers of the plaintiff before its liquidation. The first and second defendants are other companies associated with the third and fourth defendants. The fifth to twelfth defendants are accountants who are alleged to have had some role in the transactions in question.
The following outline of the plaintiffs’ case is taken from its counsel’s outlines of submissions and an affidavit of the second plaintiff. (If the plaintiff had pleaded what appears in those outlines many of the present arguments would have been avoided.) In 1999 the plaintiff established the Wunda International Super Fund (“the International Super Fund”) and in the financial years 1999 and 2000 contributed a total of $3,881,000 to it which it claimed as income tax deductions. Those deductions were not properly claimable. By a series of back-dated agreements (“the Re-organisation Agreements”) the plaintiff subsequently transferred its net assets to the first and second defendants. Effect was given to these Re-organisation Agreements by journal and other book entries in the accounts of the plaintiff and of the first and second defendants. The fifth and twelfth defendants are alleged to have made these entries.
No defendant has yet filed a defence. The first four defendants have common representation and the fifth to twelfth defendants have common representation. Each set of defendants has taken out an application for summary judgment, strikings out of the SOC and further particulars. At the conclusion of the argument the following applications were left on foot. The first to fourth defendants sought the striking out of the claims against them under R 104 on the grounds that the SOC did not comply with the rules as to pleadings and did not disclose a cause of action, or alternatively for further particulars of various of the allegations against them. The fifth defendant pursued similar relief. The plaintiffs conceded that there was to be summary judgment for the sixth to eleventh defendants. It was agreed that the summary judgment application by the twelfth defendant should be dismissed with costs in his favour on the basis that the plaintiff would subsequently plead a new paragraph 28A about the claim against him. I am still required to deal with his application for striking out of the existing SOC against him, and alternatively for further particulars of it, but not to consider the adequacy of the proposed new paragraph 28A.
The plaintiffs’ pleading is governed by Division 2 of Chapter 5 of the new Supreme Court Civil Rules 2006. These rules have not yet received any detailed judicial consideration. Counsel did not submit their operation differed from R 46A of the repealed Supreme Court Rules 1987 except in relation to 6R 102(3)(b) which will be mentioned later.
I first deal with the primary applications under 6R 104 to strike out parts of the SOC for not complying with the rules and/or for being an abuse of process in not disclosing a reasonable cause of action or otherwise for being an embarrassing pleading. It was accepted that the authorities under the repealed R 46.18 were applicable.
Counsel for the plaintiffs sought to use the affidavit of the second plaintiff sworn on 12 June 2007 (FDN 16) and its exhibits. I received its paragraphs 12 and 13, and the documents exhibited to it which were those referred to in subparagraphs 16(a)-(d) of the SOC (see below), de bene esse, and rejected the balance of it. I now reject the use of the documents referred to in 16(a)-(d) for the reasons given below. I am prepared to receive paragraphs 12 and 13, but they are of little relevance in the light of my other conclusions. As I was not ultimately called upon to adjudicate on the application by the defendants for summary judgment much of the affidavit was irrelevant. The arguments on striking out the SOC and on further particulars largely turned on the face of the pleading.
Paragraphs 16-18 of the SOC.
CLAIMS IN RESPECT OF TRANSFER OF THE ASSETS OF THE COMPANY
16Between March 2001 and about August 2001 Mr Marveggio and Mrs Marveggio (collectively “the Officers”) cause the Company to enter into and carry into effect a series of agreements (“the Reorganisation Agreements”).
Particulars of the Reorganisation Agreements
(a)Loan Agreement between the Company, Wunda Projects, WPA and Mrs Marveggio as Trustee of the WPA Trust bearing date 1 July 2000, but signed in the period between March 2001 and August 2001;
(b)Plant Bailment Agreement between the Company, Wunda Projects, WPA and Mrs Marveggio as Trustee of the WPA Trust bearing date 1 July 2000, but signed in the period between March 2001 and August 2001;
(c)Agreement for Acquisition and Disposal of Goodwill between the Company, Wunda Projects, WPA and Mrs Marveggio as Trustee of the WPA Trust bearing date 1 July 2000, but signed in the period between March 2001 and August 2001 and stamped by the Commissioner of State Taxation on 10 August 2001;
(d)Trading Stock Replacement Bailment Agreement between the Company, Wunda Projects, WPA and Mrs Marveggio as Trustee of the WPA Trust bearing date 1 July 2000, but signed in the period between March 2001 and August 2001.
17In the period between March 2001 and 30 June 2001 the Officers caused the Company to carry out a series of adjustments to the Company’s financial statements for the year ended 30 June 2001.
18The entry into and carrying into effect of the Reorganisation Agreements and the adjustments referred to in paragraph 17 above (collectively referred to as the “Transactions”) caused the net assets of the Company (including the plant and equipment and goodwill) (“Assets”) to be transferred to Wunda Projects, WPA and Mrs Marveggio as Trustee of the WPA Trust (collectively “Partnership”) for no or alternatively nominal consideration.
Under 6R 99(1)(c) the SOC “must contain a short statement of the material facts on which each cause of action is based”.
The fundamental object of a pleading is to tell the reader enough about the pleaders’ case so that in the instance of the SOC a reader can see the essential steps which establish the nominated cause of action and can understand the case that the plaintiff will be making for relief in the action. The readers for this purpose are not only the other parties in the action but also the members of the Court who have to deal with interlocutory proceedings, the trial and any subsequent arguments about res judicata or issue estoppel. Hence it is not sufficient to assert that the defendants have background knowledge of the matter which they can use to understand the SOC: Palmos v Georgeson [1961] Qd R 186. The Court is entitled to have a single comprehensible document from which the plaintiff’s case can be readily understood: Norris v McNair (1992) 167 LSJS 389 at 390-392. From reading paragraphs 16-18 of the SOC I have little understanding of what the plaintiffs alleged occurred in, and resulted from, what is stated there.
These, and other, paragraphs of the SOC adopt a style of generalised, vague and elliptical pleadings which was common before the repealed R 46 and 46A, but which those rules had sought to eliminate: Rupcic v Baulderstone (1987) 46 SASR 99 at 102-103; Williams v Telecommunication Commission (1988) 52 SASR 215 at 222; Jones v Nuske below. The practice of saying as little as possible in a pleading so as to give the party as much room as possible to manoeuvre at the trial within the breadth and generality of the pleading is to be firmly discouraged. The vice in paragraphs 16-18 of the SOC is not merely a lack of particularity, but an embarrassment and prejudice to the Court and the other parties from not being given a meaningful and functional pleading. A useful test for a meaningful and functional pleading is having read it do I believe that I understand the essence of the case being put forward by the pleader. Here I do not.
There are further major objections to these paragraphs. Paragraph 16 divides its contents between an initial pleading of the material facts on which the cause of action is based under 6R 99(1)(c) and particulars of those allegations under 6R 102. Such a division between the pleading of the cause of action and the particulars is not required by the Rules. However, the pleading having been divided between the facts material to the cause of action and the particulars, whose function is presumably under R 98(1)(b) merely to give their notice of the case at trial, whether there is a cause of action disclosed by it is to be decided on the pleaded material facts of the cause of action, not by resorting to the particulars: Pinson v Lloyds Bank [1941] 2 KB 72 at 75. Insofar as the content and effect of the Re-organisation Agreements is to be gleaned from the particulars in paragraph 16 those matters cannot be used to determine whether a cause of action has been made out.
In the context of the whole of the SOC paragraph 16 needs to plead facts about the nature of the transactions in question. It does not. The documents referred to in paragraph 16, and the “series of adjustments” referred to in paragraph 17, are apparently vehicles through which the plaintiff disposed of, and the first and second defendants gained, certain assets. The facts which need to be pleaded are presumably those which constitute the steps by which the disposition of the assets of the plaintiffs was accomplished. Insofar as the effect of the documents referred to, and the “series of adjustments”, were part of that process they need to be pleaded as facts.
Rule 6R 98(3) provides:
If a claim or defence is based wholly or in part on a document or conversation, the effect rather than the actual words of the document or conversation should be pleaded unless there is good reason to state the actual words.
This was also required in R 46A.13 and R 46.05 of the repealed Supreme Court Rules 1987 and in Order 19 r 19 of the earlier Supreme Court Rules 1947. Although the earlier R 46.05 mentioned documents “referred to in” rather than “based …… on”, as in 6R 98(3), there is no material difference. It is mandatory to plead the effect of a document insofar as it constitutes a material fact: Gaudies Pty Ltd v State Transport Authority (1991) 162 LSJS 461 at 466. Here the pleader has done no more than refer to the document. The SOC is not to be read as if it incorporates into its contents the whole of the documents referred to in it. Insofar as it was laid down in Day v William Hill (Parklane) Ltd [1949] 1 All ER 219 that documents referred to in a pleading become part of the pleading, it was only in a limited context of ascertaining on a striking out application for the action (and not merely the pleading) whether it disclosed a cause of action. It is contrary to the other authorities on the pleading of documents that the pleader can merely refer to the documents without also pleading their relevant effect: Philipps v Philipps (1878) 4 QBD 127.
The reference in paragraph 17 to “a series of adjustments” borders on the meaningless. What does adjustment mean? Does it mean every entry or alteration which may have been made in the company’s books? The facts are apparently that certain relevant entries were made in the company’s books. I fail to understand why each of them cannot be pleaded as a fact
In paragraph 18 I fail to understand how “the net assets” of the plaintiff could be transferred. I infer “net” means that it includes the transfer of liabilities as well as assets. The pleading does not permit me to understand how the plaintiff could have divested itself of its liabilities.
Paragraphs 16-18 are struck out under 6R 104 as being contrary to the Rules and as an abuse of process.
Paragraph 19.
Paragraph 19 of the SOC pleads:
19The Transactions were entered into at a time when the Company and the Officers knew, or ought to have known, of outstanding liabilities, whether contingent or otherwise, to the Deputy Commission of Taxation.
Particulars
(a)By income tax return lodged 21 March 2000 for the financial year ended 30 June 1999 the Company claimed as a deduction against its income for the purpose of assessing the Company’s income tax liability a contribution of $1,600,000 to the Wunda International Superfund (“WISF”);
(b)By income tax return lodged 15 August 2001 for the financial year ended 30 June 2000 the Company claimed as a deduction against its income for the purpose of assessing the Company’s income tax liability a contribution of $2,210,000 to the WISF;
(collectively “the Contributions”)
(c)The WISF was a non-complying superannuation fund within the meaning of section 267(1) of the Income Tax Assessment Act 1936 (Cth) and sections 39, 40, 42 and 45 of the Superannuation Industry Supervision Act 1993 (Cth)’
(d)The Contributions were not allowable deductions against the income of the Company for income tax purposes;
(e)Further particulars may be provided following discovery.
(It was not disputed that the plaintiff should have permission to re-plead paragraphs 16-18 and any other paragraphs struck out. For the purpose of dealing with the subsequent paragraphs of the SOC I assume that a new pleading will provide a proper basis for each of the preceding paragraphs of the SOC which have been struck out. If not, all of the subsequent paragraphs would be struck out consequentially on the striking out of paragraphs 16-18. It is expedient to deal with each of the paragraphs on this assumption to facilitate any necessary further re-pleading as expeditiously as possible).
The test of whether a paragraph discloses a cause of action, and so is not an abuse of process, is that it is not so obviously untenable that it cannot possibly succeed: Egan v Commonwealth Minister for Transport (1976) 14 SASR 445 at 448; Esanda Finance Corporation Ltd v Peat Marwick (1997) 188 CLR 241 at 271; Pillay v Lloyd [2000] SASC 208. Here the facts pleaded under 6R 99(1)(c) are possibly part of the cause of action and so are not to be struck out. I do not consider that the lack of detail is so great that its generality and vagueness cannot be cured by giving proper particulars.
Paragraphs 20 and 21 of the SOC.
SECTION 86 OF THE LAW OF PROPERTY ACT
20In the circumstances that existed the Transactions, in whole and in part, comprised an alienation of property made with the intent to defraud creditors within the meaning of section 86 of the Law of Property Act 1936 (SA).
Particulars
(a)The effect of entering into the Transactions was to transfer the Assets from the Company for no or alternatively nominal consideration.
21In the premises the Transactions are voidable at the instance of the Company and are hereby avoided.
The principal attack upon these paragraphs was that they were a plea of fraud without the pleading of full particularity: Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 573; Banque Commerciale (SA) v Akhil Holdings (1990) 92 ALR 53 at 57-8 . The authorities on statutory provisions similar to s86 are that the Court may infer the necessary intent to defraud creditors from the surrounding circumstances without actual direct proof that the plaintiff intended to defraud its creditors: PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515; Cannane v J Cannane Pty Ltd (1998) 192 CLR 557 at 556-7. Furthermore, the nature of the transaction disposing of the assets may be sufficient circumstantial evidence for the Court to infer the necessary intent from it: Houvardas v Zaravinos (2003) 202 ALR 535. Thus the mere allegation that the plaintiff disposed of its assets for no or nominal consideration could be sufficient for the Court to infer the necessary intent to defraud under s 86. Accordingly, the pleading is sufficient to found the cause of action. If the plaintiff wishes to rely on any other circumstances to prove the intent, it will either need to plead them or it will need leave under 6R 103(1) to adduce evidence of them at the trial. Paragraphs 20 and 21 are not to be struck out under R 104.
Paragraphs 22-26 of the SOC.
CLAIM AGAINST THE OFFICERS
22The Transactions had the combined effect of transferring the Assets from the Company to the Partnership for nil or alternatively nominal consideration.
23At all the material times each of the Officers were officers of the Company within the meaning of Part 2D.1 of the Corporations Act 2001 (Cth) and Part 2D.1 of the Corporations Law.
24At all material times, the Officers owed the following duties to the Company:
(a)A fiduciary duty;
(b)A duty of care and diligence pursuant to section 180 of the Corporations Act and section 180 of the Corporations Law;
(c)A duty to act in good faith and for proper purpose pursuant to section 181 orf the Corporations Act and section 181 of the Corporations Law; and
(d)A duty not to use their position to the detriment of the Company pursuant to Section 182 of the Corporations Act and section 182 of the Corporations Law (collectively “Officers’ Duties”).
25In causing the Company to enter into the Transactions each of the Officers breached the Officers’ Duties.
Particulars of Breach of Officers’ Duties
(a)The Officers preferred the interests of themselves to that of the Company, including the interest of creditors, actual, contingent and future;
(b)(abandoned)
26In the premises:
(a)each of Wunda Projects, WPA and Mrs Marveggio as Trustee of the WPA Trust hold their interest in the Assets on trust for the Company;
(b)In the interest of each of Wunda Projects, WPA and Mrs Marveggio as Trustee of the WPA Trust in the Assets is charged in favour of the Company.
The officers referred to are the third and fourth defendants. Again, as in the case of paragraphs 16-18, paragraphs 24, 25 and 26 are so general, vague, elliptical and uninformative that they are embarrassing pleadings. Subparagraph 24(a) is meaningless in pleading a fiduciary duty in the abstract. It must be given some content. The various duties referred to in paragraph 24 are not co-extensive. Paragraph 25 is an unhelpful rolled-up plea which does not say which parts of the transactions breached which duties the officers owed to the plaintiff. The particulars in paragraph 25(a) cannot cure the generality in the earlier part of paragraph 25, and even if they could, they do not.
Paragraph 26 is the statement of a legal conclusion which depends upon what is meant by “in the premises”. Whether the premises can justify this legal conclusion can only be assessed from a far more detailed pleading of “the premises”. Paragraphs 22-26 are to be struck out under 6R 104.
Paragraphs 28 and 29 of the SOC.
Accessorial liability of the Accountant
28At all material times the Accountant assisted with and was an accessory to the breach of the Officers’ Duties described in paragraph 25 above.
Particulars
(a)The Accountant advised the Company to enter into the Transactions;
(b)The Accountant facilitated the entry into the Transactions.
29 In the premises the Accountant is liable to the Company for equitable damages.
For present purposes the “Accountant” in these paragraphs is only the fifth and twelfth defendants. Again paragraph 28 is a vague, generalised, elliptical and uninformative pleading and is to be struck out on a similar basis to paragraphs 16-18. The references in subparagraph 28(a) to “advise”, and in (b) to “facilitate”, are far too broad and unspecific. There is no identification of any dates or of the identity of the persons who acted for the fifth defendant. The deficiencies cannot be cured merely by giving proper particulars.
The plaintiff asserts in its written submission that it relies on liability under the principle in Barnes v Addy (1874) LR 9 Ch App 244. However the SOC does not allege the Accountant had the requisite knowledge which is an essential element of such a course of action: Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373; United States Surgical Corporation v Hospital Products International [1983] 2 NSWLR 157 at 247 et seq. If the plaintiff relies upon some form of constructive knowledge, as it appears from its outline that it does, it still needs to plead the circumstances from which the inference of knowledge is to be drawn. Paragraphs 28 and 29 are to be struck out under 6R 104.
Paragraphs 30 and 31 of the SOC.
Misfeasance
30In the premises, each of the Officers and the Accountant were persons who were each guilty of a breach of duty in relation to the Company within the meaning of section 598 of the Corporations Act and section 598 of the Corporations Law.
31As a consequence of the breach of duty, the Company has suffered loss and damage.
The claim under s 598 of the Corporations Act can only be pursued by the second plaintiff as the liquidator of the first plaintiff. S 598 is merely a procedural section and it does not impose any additional liability on the defendants over that to which they may be otherwise subject from the other matters pleaded in the SOC: re Claridge House Ltd; Mount v Tomlinson (1981) 28 SASR 481. I am not sure what benefit the plaintiffs hope to obtain by the use of s598 over and above the other causes of action pleaded by them. However, if they wish to invoke s 598, they are obliged to plead it. Again, the vice of paragraph 30 is in the words “in the premises”, as was the case for paragraph 26. If the premises are properly pleaded earlier in the SOC, paragraphs 30 and 31 can remain. At this stage I will not strike them out.
Paragraphs 32-35 of the SOC.
Voidable Transaction
32As a consequence of the entry by the Company into the Transactions the Company was or became insolvent.
33The Company and the Partnership are related entities within the meaning of section 9 of the Corporations Act and section 9 of the Corporations Law.
34The company derived no benefit from the Transactions and suffered detriment.
Particulars
(a)The effect of entry into the Transaction was to transfer Assets from the Company to the Partnership for no or alternatively nominal consideration.
35By reason of the matters referred to in paragraphs 32 to 34 the Transactions, in whole or in part constituted:
(a)an uncommercial transaction within the meaning of section 588FB of the Corporations Act and section 588FB of the Corporations Law;
(b)an insolvent transaction within the meaning of section 588FC of the Corporations Act and section 588FC of the Corporations Law; and
(c)a voidable transaction within the meaning of section 588FE(5) of the Corporations Act and section 588FE(5) of the Corporations Law.
The second plaintiff cannot have a cause of action under s 588FB of the Corporations Act in the terms of that section unless it may have been expected that a reasonable person in the company’s circumstances would not have entered into the transactions. This has not been pleaded, but it is an essential element for such a cause of action. Therefore the pleading of these paragraph does not disclose a cause of action under that section.
There can only be a cause of action under s 588FC of the Corporations Act if at the time of the relevant transactions the company was insolvent. Paragraph 32 does not plead that the plaintiff was insolvent at the relevant times for the purposes of s 588FC. The alternative of “or became insolvent” can equally mean that it only became insolvent at some later time. Therefore, an essential element of the cause of action under s 588FC has not been pleaded. Accordingly, paragraphs 32-35 are to be struck out under 6R 104.
Alternative Order for Further Particulars.
As a consequence of my rulings under 6R 104 it is only necessary for me to deal with a small part of the application for further particulars under 6R 102. However, as a good deal of argument was directed towards issues of further particulars, and as it will be relevant for re-pleading the paragraphs which have been struck out, I make some general comments about the requirements for pleading particulars under the new rules.
In Salena Estate Wines Pty Ltd v De Vitol [2005] SASC 274 at [49] the Full Court cited with approval what I had said about R 46A and commented on it as follows:
In Jones v Nuske (2003) 227 LSJS 331, Judge Lunn considered the introduction and the purpose of Rule 46A. He observed:
“As this action was commenced after 3 June 2000 its pleadings are governed by the new Rule 46A. Much of the old law on pleadings and particulars have been superseded by the provisions of Rule 46A. Rule 46A is to be viewed and interpreted in the light of the mischief which it was designed to overcome. Under the Former Rules it was notorious that substantial delays and costs were generated in actions by detailed requests for particulars, and arguments about them, when the resulting amended pleadings contributed little, if anything, to the just and expedient resolution of the action. Rule 46A is intended to limit disputes about proper particularity and pleadings to situations where the lack of particularity would significantly prejudice another party. The old practice also encouraged pleaders to give as little particularity as possible, and hope either the opponents would not request better particulars or the Court would not order them. The new Rules are intended to counteract this.”
He observed that under the former Rules the Court would make interlocutory determinations about the degree of particularity which was required to enable a fair trial. Rule 46A placed the onus on the pleader to plead its claim with the necessary particularity in its initial pleading with the need for the Court to make such determinations.
This applies equally to the new 2006 Rules.
There is no direct equivalent in the new Rules of R 46.16 of the repealed 1987 Rules restricting the right to particulars before the pleading of a defence. The plaintiffs submitted that the Court had a discretion under the new rules not to order particulars before the defence. I need not pursue that issue here. As the plaintiff needs to re-plead substantially most of its SOC before any defences are required to be filed it is expedient that any issues about further particularity should be dealt with at this stage. The issue of whether particulars should be ordered before a defence could have been raised by the plaintiff as an objection under 6R 129 to the defendants’ applications. It was not raised and I infer that it was impliedly waived.
In opposition to the further particulars, the plaintiff through its counsel asserted that it could not give further particulars without first obtaining disclosure and inspection of the defendants’ documents. There is no doubt that the Court has a discretion to allow a party to defer giving particulars until after it has had disclosure and inspection of the other parties’ documents: Chapman v Conservation Council of SA, Debelle J, [1998] SASC S6973; Electricity Trust of SA v Union Insurance Company, Perry J, 9 July 1997, Judgment No S 6241; Ross v Blake Motors [1951] 2 All ER 689 at 695. In order to exercise that discretion the Court should have some factual basis on which to act which causes it to conclude that the plaintiff does not have the documents it needs to give the necessary particulars, the other party does have those documents and the justice of the case requires that there should be disclosure of them before the particulars are given. Sometimes a party will plead that it is unable to give further particulars until it has had disclosure of the other parties’ documents. Here there was no such pleading. Neither is there any affidavit of the plaintiffs on the topic. The material before me discloses that the plaintiff does have considerably greater knowledge of the transactions in question than it has seen fit to include in its present SOC. Before I would be prepared to allow the plaintiff to defer giving particulars until after disclosure of the defendants’ documents I would want satisfactory evidence that it has given all the particulars which it now can give and there is some proper basis why it should be permitted to delay completing its pleading of the SOC until after disclosure of the defendants’ documents. I raise, without determining it, whether it is relevant on this point that the second plaintiff as a liquidator has the capacity to have the defendants examined under Part 5.9 of the Corporations Act 2001 in order to obtain the relevant documents which he does not already have. On what is before me at present I am not prepared to exercise any discretion to allow the plaintiff to defer pleading proper particulars until after disclosure by the defendants.
R 102(3) provides:
The Court will only make an order for further particulars if satisfied that –
(a)the pleadings do not give fair notice of the party’s case; and
(b)the order is necessary to avoid substantial prejudice to the other party in whose favour the order is to be made.
The corresponding R 46A.09(1) of the repealed 1987 Rules referred to “significant prejudice” rather than “substantial prejudice”. I do not need to go into whether 6R 102(3) in referring to “substantial” imposes a more restrictive right to an order for further particulars than did R 46A.09(1). The orders which I make would be the same under either rule.
I adhere to what I said in Coonawarra Premium Vineyards Pty Ltd v Nugan Group Pty Ltd above at [8]:
The party seeking an order for further material facts under R 46A.09(1) must satisfy both legs of a two-fold test, namely that the facts pleaded to not disclose facts sufficient to give it fair notice of the case which it have to meet and in addition that it would be significantly prejudiced in the conduct of its case by not having them. Merely to show that the facts pleaded are not sufficient to give it fair notice of the case which it has to meet will not justify such an order. It must also establish that the absence of such pleaded material facts will cause it significant prejudice in the conduct of its case. Ordinary prejudice is not sufficient. Ordinary prejudice is presumably dealt with under the latter part of $ 46A.10(1) by the trial Judge refusing to allow the party in default to present a case which is outside the terms of its pleadings.
It applies, mutatis mutandis, to 6R102.
The Full Court recently dealt with the ordering of further particulars under R 46A.09(1) in H Stanke & Sons Pty Ltd v O’Meara, 4 July 2007, Judgment No [2007] SASC 246. There, contrary to my more restrictive view of that rule at first instance, the Court ordered in some instances that further particulars should be given at the interlocutory stage on an inference to be drawn from the pleading itself that the other party would be significantly prejudiced in the presentation of its case if it did not have those further particulars.
Further Particulars of Paragraph 19 of the SOC.
I consider that the defendants would be substantially prejudiced in not having particulars of the “outstanding liabilities” referred to in paragraph 19 of the SOC. The particulars pleaded in paragraph 19 do not address this question at all. There was some suggestion that it could involve fringe benefits tax as well as income tax. On the approach adopted in Stanke’s case there would be substantial prejudice if these particulars are not given. They will be ordered.
I do not consider 6R 102(3) is satisfied for the request for particulars of how the company and its officers knew, or ought to have known, of the outstanding liabilities. If the plaintiff declines to give further particulars, the defendants can object under 6R 102(3) of evidence being led at the trial which is outside the pleadings on the point.
Paragraph 19(c) is a statement of a legal conclusion. I do not understand how the plaintiff intends to establish that conclusion at trial. Insofar as it is to be drawn from facts which the plaintiff needs to prove the defendants will be substantially prejudiced by not having particulars of them. The scope of disclosure of documents under 6R 136 may be affected by such particulars. I order that they be given.
Paragraph 19(e) is an impermissible pleading: Zanardo v Ford Motor Company [1964] VR 769. It will be struck out.
Further Particulars of Paragraph 20.
For the reasons given above, sufficient particularity has been given by the plaintiff for it to be able to make out its pleas under this paragraph. It will be for the trial Judge whether the plaintiff can lead any other evidence in support of these paragraphs. The defendants have not shown any substantial prejudice which will entitle them to further particulars. An order will be refused.
I have today made the following orders on FDN 7 and 12:
1Paragraphs 16-18, 19(e), 22-26, 28-29 and 32-35 of the statement of claim are struck out.
2The applications to strike out paragraphs 19-21, 30 and 31 of the statement of claim are refused.
3The plaintiffs are to give further particulars of “outstanding liabilities” and how WISF was a non-complying superannuation fund as alleged in paragraph 19 of the statement of claim.
4Permission to the plaintiffs to re-plead the paragraphs struck out.
5The plaintiffs are to file any further statement of claim within 21 days or such further period as the Court allows.
6Other orders for further particulars sought by the defendants are refused.
7By consent, judgment for defendants 6-11 (inclusive) against the plaintiffs with their costs of action to be paid by the plaintiffs.
8Costs of FDN 7 and 12 as taxed or agreed to be paid by the plaintiffs to the defendants.
9Liberty to the defendants to apply for the costs under paragraphs 7 and 8 to be as between solicitor and client and/or payable immediately.
10Fit for senior counsel.
11Liberty to speak to the minutes of order.
12Further Directions hearing to be held on 13 September 2007 at 11.50 am.
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12
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